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Financial Accounting Process Analysis

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The Processes in Business Financial Accounting The business financial accounting process is separated to three different types of transactions used to record business transactions in the accounting records. This information is then accumulated into financial statements. The first transaction type is to make certain that reversing entries from the previous period have been properly reversed. The second transaction type contains the steps needed to record individual business transactions in the accounting records. The third transaction type is the period-end processing necessary to close the books and produce financial statements. In the beginning of period processing, all transactions entitled as reversing entries in preceding periods have …show more content…

Accountants are often privy to private and sensitive information about their clients, such as bank account numbers. It is very important that the trust between an accountant and their clients are not abused as accountants have a good deal of power in regard to their clients. It is also important that the industry itself is not condemned as an unethical industry as it could potentially danger business for all accounting firms. Poor ethics in accounting practices could result many negative consequences. The first general result is a lag in the business. Accounting firms heavily depend on word-of-mouth for promotion, a few bad rumours about unethical behavior regarding a particular frims culd potentially keep away potential clients. Serious legal repercussions could be done on those who are guilty of violating legal codes and standards for their …show more content…

Whether or not financial reports are not required to provide because the company is held privately, making sure that financial reports are accurate is still part of using an ethical accounting system. This applies even if a company’s financial reports are made accessible to creditors to acquire loans. Separating functions within the department is one of the ways in which an accounting department protects its accounting system ethics and internal users. For example, the authority to approve or sign checks is not given to the person who generates checks during the accounts payable function. This includes working across functions. The duties of the accounting payroll clerk is separate from the accounts payable clerk and neither can access each other’s

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